Published on July 18th, 2020 |
by Dr. Maximilian Holland
CleanTechnica recently interviewed Peter Carlsson, Chief Executive Officer of Northvolt, the Swedish battery manufacturing startup-slash-giant. Northvolt plans to use renewable energy to manufacture battery cells and packs for the European market, and already has substantial agreements in place with Volkswagen, BMW, ABB, and others. We sat down virtually with Peter to learn about the company’s unique approach, and plans.
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In this article, we are presenting part one of the raw interview transcript for those who want the undiluted source. Parts two and three will follow shortly. Look out for CleanTechnica’s further editorial analysis on what we learned from Peter Carlsson in the coming days.
The first section of the interview covers Peter Carlsson’s own background, the conception of Northvolt, its unique proposition for Europe, and recent growth in demand for batteries. The audio of this interview is embedded above and a video version (really, another audio version) is on CleanTechnica.TV (YouTube) and embedded above.
Interview transcript lightly edited for clarity:
Zach Shahan for CleanTechnica: We’re here today with Peter, CEO of Northvolt, Peter Carlsson … and leading our Cleantech Talk discussion today, for CleanTechnica, is Dr. Max Holland who’s got a large list of battery-related questions. So, looking forward to the conversation, thank you guys.
Max Holland for CleanTechnica: Thanks, Zach. Thanks, Peter, for making the time. I know you’re very busy. It’s a fast growing industry and you guys are trying to ramp pretty quickly as well, so thank you for sparing the time.
Peter Carlsson, Northvolt CEO: Yeah, thank you.
Most of our regular audience are into cleantech, but just as an introduction for a broader audience: What is the mission statement of Northvolt? What is it that you guys are trying to achieve?
Okay, if you go back a little bit to the beginning of 2016: I’d stepped out of Tesla and I was thinking about “what is the next mission?” And I actually thought that that mission was going to be around helping other startups grow — but realized that I wanted to make use of my operational background and the experiences also achieved at Tesla.
And we started to look at Europe. Europe, from a perspective of a very strong commitment to the Paris treaty — basically, looking at the 80% CO2 reduction over a couple of decades, that’s requiring a significant transformation of transportation. Getting oil out, and in with primarily batteries, electrification, but also fuel cells.
And also seeing the need of a pretty significant transformation also of the power generation, where coal, natural gas, oil needs to get out, or come down dramatically, and be replaced by renewable sources. The common denominator of both of these transformations is a huge need for energy storage, and a big part of that energy storage will come from batteries.
So, that was on the demand side.
And then we looked at Europe, on the supply side … you have Varta and you have Saft but they are — in the big world — niche players. And so there was a pretty significant lack of supply versus a huge demand. And that was kind of the starting point where we saw that — this is probably one of the biggest impacts we could do — if we could build large-scale batteries in a very sustainable way to support this transformation.
And how do you see, more specifically, this battery market developing. Everyone has a slightly different take on it. Obviously, we had EVs 100 years ago — and we had a more recent demonstration time for EVs in the 1990s — and then for various reasons they fell off. And then in 2009–2010 we saw them start to pick up again. How do you look at this kind of evolution of the battery electric vehicle space, and now increasingly battery storage for renewables?
I think there are three things coming together here that I think will drive a tremendous “hockey stick” here over the next 10 years in electric vehicles.
One is just the evolution of the battery technology — both the energy density, but connected to that, the cost per kilowatt-hour of cells, where gradually it is getting down to cost parity versus combustion engines from just a pure manufacturing point of view.
Secondly, you started to see more and more a clear consumer wish — specifically, I would say in northern Europe, we see very clear signs that people who are thinking about buying their next car are really concerned about buying a combustion engine. Partly for environmental reasons, but also partly because they are really worried about the second-hand value of a vehicle, of a technology, that most governments have kind of said this is gonna be — whether it’s 2030, 2035, or 2040 — it’s gonna be an obsolete technology. So you’re starting to see that customer behavior.
And thirdly, you’re also seeing the regulatory part. The EU emissions requirements are coming down very hard and basically requiring different types of new energy solutions in order to meet the emissions criteria.
So, these three things coming together, in the next coming years, I think is gonna drive a tremendous change, a much faster change than what most of the auto industry thinks. And I think it’s going to be putting a lot of constraints on the supply chain.
In fact, now — during the COVID situation — it is kind of interesting that when you look at [overall] car sales here in Europe it’s dramatically down, 50% plus. But in a number of markets EV sales are up — in Sweden it’s up 80% year-on-year and in Germany it’s up ~140%. So, it’s, I think it’s also that, in order to get customers back into the showrooms — I think the car companies need to also come and offer new and sustainable products, in order to get back the kind of demand that was there before the crisis. And I think this pandemic is actually going to accelerate some of these transitions. Because I think consumers have been thinking about this. That’s part of it.
And also — getting economies going after this crisis. I think every big government around the world is thinking of, “where do I get the most bang for the buck in terms of investments in the economy?” And many of them — like the European Union — [are] focusing on so-called “green deals.” What are the sustainable investments that will make the wheels go faster? So, I think we’re just looking at that very fast transformation in front of us and it’s kind of fun to be in the midst of that perfect storm!
Yeah, absolutely, I mean obviously we cover this market in quite close detail and it is exciting what’s happening, especially in Europe this year. …
On that note, another thing that I think is a little bit fascinating is … the strong driver in this part … well, when I moved to Silicon Valley in 2011 — with Tesla and a number of startups — the electrification was very strongly initiated in Silicon Valley.
But then China took [EVs] on very strongly — and also from a government point of view obviously having pretty significant environmental challenges — that China has been kind of the driving force in battery development and electrification.
But if you look at last year, and specifically I would say the last 12 months, there’s been a momentum change between China and Europe. And Europe is investing heavily now and is really committed to go ahead. So, it’s an interesting dynamic between the different markets here.
It certainly is. Some of that is obviously down to some of the regulatory environment. They changed that in China in the middle of last year and some of the smaller carmakers didn’t make it through that regulatory change. In the long term, the regulatory change is aimed at having larger models, models that can potentially be exported, and obviously when you make a change like that, it sometimes takes a while to settle down. But I think they’re still aiming for 25% of the auto market by 2025, so that’s going to be interesting to watch.
And then of course on the other side — Europe this year — as you say, these new emissions regulations … the ball falls in Europe’s court for a little while.
Before we jump into the details of how the market is growing, can I just ask — for any younger members of the audience listening — did you imagine yourself getting into this space when you were younger and starting out on your career? Has it happened in a somewhat planned way or, like much of life, in a somewhat accidental way? Did you see yourself being in this spot 20 years ago?
No, absolutely I did not. I started my career in telecoms, in the mobile phone era. So my first growth journey was with Ericsson, and Sony-Ericsson, fighting Nokia in the late ’90s on digital phones. Which was also a fascinating race to be part of — before a “small company” from Silicon Valley came with new software and kind of took it all over!
And then I had the fortune/opportunity of being part of that Tesla growth path on electrification. And I think the Tesla years really both inspired me in terms of how you build a large-scale operation from scratch, and challenge conventional industries, and the fact that it is possible, if you focus on the right things.
But also seeing very clearly where you think that the industry is going in the next 10–15 years. And you kind of become a little bit frustrated that so few others are at least not daring to invest in a path that is so obvious.
And obviously we started up this as a pre-study. We basically said, “this thing in Europe, it looks too interesting not to try,” so we put some money behind it. We were a small group — actually, in California — that started to travel around the world to test the assumptions.
Is there an opportunity to compete with Asia? To do a supply chain set up in Europe that could both compete in technology cost — and also do it in a very sustainable way?
And the more we looked into it, the more we realized what an opportunity this was. But also the challenge that comes with high investment requirements. … This is really an industry where you either go big or you go home. So that was the challenge.
But to answer your question, no, this was certainly not an idea that I’d had for a long period of time, but it became an evolution of having an opportunity of joining two growth journeys, and at least getting some insight into where technology in the industry is going.
And then it felt — with my operational background, and this being a large-scale game — that it was a path that seemed more and more obvious, that at least I should try.
End of Part One
In part two of the interview, coming soon, we dive into more detail about Northvolt’s planned production volume and timelines.
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